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on History and Philosophy of Economics |
| By: | Sabiou M. Inoua (Chapman University); Vernon L. Smith (Chapman University) |
| Abstract: | The relevance of Adam Smith for understanding human morality and sociality is generally accepted; witness the growing interest that his work is stimulating among scholars of various academic backgrounds (philosophers, political theorists, sociologists, economists). But, paradoxically, Adam Smith’s theory of economic value enjoys a less prominent stature to day among economists, who, while they view him as the ‘father of modern economics’, considered him more as having had the right intuitions about a market economy than as having developed the right concepts and the technical tools for studying it. Yet the neoclassical tradition failed to provide a satisfactory theory of price formation owing to the dominant axiom of price taking behavior; for if everyone takes prices as given, how do these prices emerge in the first place? Who is giving the prices? One early escape from this crucial price-discovery problem consisted of assuming that all traders should have complete information of supply and demand and the consequent equilibrium prices (Jevons, [1871] 1888) ; the other, that formed the basis of general equilibrium theory, imagines a fictional auctioneer who finds the equilibrium prices by trial-and-error adjustments or tatonnement (Walras, [1874] 1954). Adam Smith’s theory of the market mechanism (Ch. 7, Book 1, Wealth of Nations, 1776), as we shall argue in this paper, offers the right conceptual framework for understanding competitive price discovery, for which we offer a mathematical formulation. Mathematically, the driving force behind competitive price dynamics is not excess demand per se, but its integral; we make this concept, explored at the beginning in experimental economics (Smith, 1962), part of our formalization of classical competitive price dynamics. Finally, we explain key propositions of Smith’s theory of value in the light of this mathematical formulation. |
| Keywords: | Methodology of Economics; Micro-economic Theory; Experimental Economics; History of Economic Thought |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:20-10&r=all |
| By: | Maxim L. Pinkovskiy |
| Abstract: | Thomas Piketty?s 2014 book Capital in the Twenty-First Century may have been a greater sensation upon publication than Karl Marx?s nineteenth-century Das Kapital. It made the New York Times bestseller list, generated myriad reviews and responses from economists at top institutions, and was the subject of a standing-room-only session at the recent American Economic Association annual meeting. In Capital, Piketty argues that wealth inequality is set to rise from its relatively low levels in the 1950s through the 1970s to the very high levels it once occupied at the dawn of the Industrial Revolution?the time of the heroes of Jane Austen and Honor de Balzac. He supports this argument with voluminous evidence on the history of the capital stock and of inequality in developed countries, which he argues have been moving in ways consistent with his theory. Piketty proposes that governments worldwide intervene to prevent this rise in inequality, most importantly by levying a global tax on capital. |
| Keywords: | capital; technological frontier; inequality; Piketty; growth |
| JEL: | N2 E2 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednls:87045&r=all |
| By: | Thoma, Johanna |
| Abstract: | Judgementalism is an interpretation of normative decision theory according to which preferences are all-things-considered judgements of relative desirability, and the only attitudes that rationally constrain choice. The defence of judgementalism we find in Richard Bradley’s Decision Theory with a Human Face (Cambridge University Press, Cambridge, 2017) relies on a kind of internalism about the requirements of rationality, according to which they supervene on an agent’s mental states, and in particular those she can reason from. I argue that even if we grant such internalism, attitudes other than preferences in the judgementalist sense rationally constrain choice. This ultimately supports a different interpretation of preference. |
| Keywords: | decision theory; preference; rational requirements |
| JEL: | J1 |
| Date: | 2019–12–11 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:102568&r=all |
| By: | Jean Luc Gaffard (OFCE, Sciences Po, Paris, France Université Côte d'Azur) |
| Abstract: | This paper is aimed at revisiting monetary analysis in order to better understand erroneous choices in the conduct of monetary policy. According to the prevailing consensus, the market economy is intrinsically stable and is upset only by poor behaviour by government or the banking system. We maintain on the contrary that the economy is unstable and that achieving stability requires a discretionary economic policy. This position relies upon an analytical approach in which monetary and financial organisations are devices that help markets to function. In this perspective, which focuses on the heterogeneity of markets and agents, and, consequently, on the role of institutions in determining overall performance, it turns out that nominal rigidities and financial commitment offer the means to achieve economic stability. This is because they preventsuccessive, unavoidable disequilibria from becoming explosive. |
| Keywords: | Series: Document de travail |
| JEL: | E31 E32 E5 E61 E62 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:fce:doctra:1840&r=all |
| By: | Jean Luc Gaffard (OFCE, Sciences Po, Paris, France Université Côte d'Azur) |
| Abstract: | L’article est dédié à reconsidérer l’analyse monétaire afin de mieux comprendre des choix erronés dans la conduite de la politique monétaire. Suivant le consensus en vigueur, l’économie de marché est intrinsèquement stable, étant seulement perturbée par les mauvais comportements du gouvernement et des banques. Nous maintenons, au contraire, que cette économie est instable et que la stabiliser requiert une politique économique discrétionnaire. Une telle position repose sur une approche analytique suivant laquelle l’organisation monétaire et financière des échanges est un outil qui facilite le fonctionnement des marchés Suivant cette perspective centrée sur l'hétérogénéité des marchés et des agents, et donc sur le rôle des institutions dans la détermination de la performance globale, il apparaît que les rigidités nominales et l'engagement financier sont les moyens qui assurent la stabilité de l’économie. La raison est que ces mesures empêchent les déséquilibres successifs et inévitables d’être explosifs. |
| Keywords: | Series: Document de travail |
| JEL: | E31 E32 E5 E61 E62 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:fce:doctra:1839&r=all |
| By: | Giacomo Bonanno (Department of Economics, University of California Davis) |
| Abstract: | In an earlier paper [Rational choice and AGM belief revision, Artificial Intelligence, 2009] a correspondence was established between the choice structures of revealed-preference theory (developed in economics) and the syntactic belief revision functions of the AGM theory (developed in philosophy and computer science). In this paper we extend the re-interpretation of (a generalized notion of) choice structure in terms of belief revision by adding: (1) the possibility that an item of ``information'' might be discarded as not credible (thus dropping the AGM success axiom) and (2) the possibility that an item of information, while not accepted as fully credible, may still be ``taken seriously'' (we call such items of information ``allowable''). We establish a correspondence between generalized choice structures (GCS) and AGM belief revision; furthermore, we provide a syntactic characterization of the proposed notion of belief revision, which we call filtered belief revision. |
| Keywords: | credible information, allowable information, AGM belief revision, choice structure |
| JEL: | D80 |
| Date: | 2020–02–26 |
| URL: | http://d.repec.org/n?u=RePEc:cda:wpaper:338&r=all |
| By: | Levy, Daniel; Mayer, Tamir; Raviv, Alon |
| Abstract: | Textual analysis of 14,270 NBER Working Papers published during 1999–2016 is done to assess the effects of the 2008 crisis on the economics literature. The volume of crisis-related WPs is counter-cyclical, lagging the financial-instability-index. WPs by the Monetary-Economics, Asset-Pricing, and Corporate-Finance program members, hardly refer to “crisis/crises” in the pre-crisis period. As the crisis develops, however, their study-efforts of crisis-related issues increase rapidly. In contrast, WPs in macroeconomics-related programs refer quite extensively in the pre-crisis period to “crisis/crises” and to crises-related topics. Overall, our findings are consistent with the claim that economists were not engaged sufficiently in crises studies before the 2008 crisis. However, counter to the popular image, as soon as the crisis began to unravel, the NBER affiliated economists responded dramatically by switching their focus and efforts to studying and understanding the crisis, its causes and its consequences. |
| Keywords: | 2008 Financial Crisis,Textual Analysis,Financial Crises,LDA,Topic Modelling,Securitization,Repo,Sudden Stop |
| JEL: | A11 C38 C55 E32 E44 E58 F30 G01 G20 G21 G28 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:214194&r=all |
| By: | Marques, Pedro (Universitat Politècnica de Valencia); Morgan, Kevin (Cardiff University) |
| Abstract: | This paper argues that the development of regional innovation concepts drawing primarily on the experiences of advanced regions, has meant that the dominant narratives about regional development are not adequate to explain the experiences of less developed regions (LDRs). Drawing on the extensive experience of the authors doing research in LDRs, the paper develops three main arguments: first, the emphasis put on networks and systems means that not enough attention is paid to the internal capabilities of organisations, including those of firms, Universities and the public sector. These capabilities shape the strategies of these organisations regarding innovation and collaboration, and therefore influence the nature and content of innovation systems. Second, the paper argues that too much attention has been paid to the importance of informal institutions, rather than analysing the dynamic interaction between formal and informal institutions. The latter approach allows us to avoid culturally deterministic interpretations of under-development and to think about ways in which formal policies could help to improve innovation environments. Third, the paper argues that innovation at the firm level does not always lead to improvement in productivity and economic growth at the aggregate scale. This is partly due to the effects of the dynamics discussed in the two previous points, but is also because advanced regions benefit from a socio-economic ecosystem which supports the translation of new ideas into economic activity. This means that though innovation is fundamental for long-term economic growth, it is not sufficient without mechanisms that ensure its dissemination through the entirety of the economic system. |
| Keywords: | Less developed regions; Innovation; Productivity; Organisational capabilities; Institutions; Regional Development |
| JEL: | O31 O43 P48 R11 |
| Date: | 2020–02–26 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lucirc:2020_003&r=all |
| By: | Lima de Miranda, Katharina (Kiel Institute for the World Economy); Snower, Dennis J. (Kiel Institute for the World Economy) |
| Abstract: | This paper explores a new theoretical and empirical approach to the assessment of human well-being, relevant to current challenges of social fragmentation in the presence of globalization and technological advance. We present two indexes of well-being – solidarity (S) and agency (A) – to be considered alongside the standard indexes of material gain (G) and environmental sustainability (E). The four indexes – SAGE – form a balanced dashboard for evaluating well-being. The solidarity index covers the needs of humans as social creatures, living in societies that generate a sense of social belonging. The agency index involves people's need to influence their fate through their own efforts. While "economic prosperity" (material gain) is conventionally measured through GDP per capita, "social prosperity" can be measured through our solidarity and agency indexes, alongside environmental sustainability that is measured through the Environmental Performance Index. The SAGE dashboard is meant to provide a "sage" approach to assessing well-being, since it aims to denote sagacity in the pursuit and satisfaction of fundamental human needs and purposes. Many of the prominent challenges of the twenty-first century, including the dissatisfaction of population groups who feel left behind by globalization and technological advance, may be viewed in terms of a "decoupling" of economic prosperity from social prosperity. We present a theoretical model that provides a new perspective on the welfare effects of globalization and automation. The dashboard is meant to provide an empirical basis for mobilizing action in government, business and civil society to promote a recoupling of economic and social prosperity. |
| Keywords: | Beyond GDP, inequality, empowerment, social cohesion, social inclusion, social solidarity, social sustainability, well-being |
| JEL: | I31 O11 D63 D91 A13 F01 F60 H11 |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12998&r=all |
| By: | Gauri,Varun |
| Keywords: | Health Care Services Industry,Educational Sciences,Human Rights,Public Health Promotion,Nutrition |
| Date: | 2019–06–20 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:8907&r=all |
| By: | Eloi Laurent (OFCE, Sciences Po, Paris, France); Jean Jouzel (OFCE, Sciences Po, Paris, France) |
| Keywords: | Well being, sustainability, growth, GDP |
| JEL: | I31 I32 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:fce:doctra:1835&r=all |